HOBART | HFS Bank FSB, founded in Hobart more than 70 years ago, is being sold to Greensburg, Ind.-based MainSource for $36.1 million.
HFS President James Greiner said the sale "is a good opportunity for shareholders, employees and customers" and will allow the bank to offer larger commercial loans and better services.
HFS, which has two branches each in Portage and Crown Point and offices in Hobart and in Griffith, was founded as a mutual savings and loan, Hobart Federal Savings and Loan, in 1934. It went public in 1985 and changed its name to HFS when it started to expand, Greiner said Friday.
HFS has had many potential suitors and inquiries about its sale since it went public, Greiner said.
"We've been talking to people for awhile," he said.
The passage of the Sarbanes-Oxley law has made it harder to justify staying small, Greiner said.
The law's more than 60 pages mandate everything from the establishment of a Public Company Accounting Oversight Board to the inclusion of at least one financial expert on corporate audit committees. The law requires corporations' chief executive officers and chief financial officers to certify their companies' financial statements are true and accurate.
"It's fairly expensive for any bank to comply (with the regulation) now," Greiner said. "It doesn't produce any revenue. What we're doing is going to happen to other financial institutions."
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Through its two banking subsidiaries, MainSource Bank of Greensburg and MainSource Bank of Illinois in Kankakee, the company operates 54 offices in 23 Indiana counties and six offices in three Illinois counties. It has been looking to expand into Northwest Indiana, Greiner said. The merger will produce a stronger, larger bank for its communities.
After the sale, which still requires regulatory and shareholder approval, the bank will have assets of more than $2 billion above the current base of $1.6 billion.
Main Source has offered Greiner a contract to remain president of the bank for two years, and all the staff will be kept in place after the sale, he said.
"MainSource wants to expand their operation," Greiner said. "The last thing they want to do is lose employees. I think it's a good opportunity for my employees. They can grow with the bank. It's a win-win for everyone."
The name of the bank is expected to be MainSource Northwest Indiana, but that is subject to change, Greiner said.
In a prepared statement, MainSource President and CEO James L. Saner Sr. said his bank's purchase of HFS "is a great fit in the MainSource family."
"Our partnership will allow HFS to become an even better bank, because in the future we will focus on commercial business as well as continue offering a full array of retail products to the communities they serve," Saner stated.
HFS holders will be offered about $19.35 a share in cash and stock for their holdings. If the purchase receives regulatory approvals, it should close during the second quarter of 2006.